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A diversified resources company with a difference would be the perfect way to describe North Limited, and the differences certainly stand out. Like its peers, including Rio Tinto and BHP, North has a variety of gold and base metals projects, some of exceedingly high quality. But unlike its peers, North adds a dash of the exotic and controversial with interests in uranium, forestry and industrial pump manufacture and supply.

It's a generally well run and geographically diversified company with operations in Australia, South America and Europe. Unlike its peers though, some of these operations are shrouded in controversy, although BHP and Rio do a pretty good job of attracting their fair share of trouble.

North by division

Iron Ore: This division performs pretty well, especially at Robe River, but recent reports have shown sales falling short of expectations, with a focus now skewed towards Europe rather than Japan. Japanese steel makers are predicting they will make less steel this year by some 10Mt (about 9%), clearly impacting demand for iron ore.

Uranium: The uranium mines, held through Energy Resources of Australia, are operating well but the planned expansion at the notorious Jabiluka mine is cause for controversy #1. From a moral and environmental point of view, uranium will always be contentious but North need to expand and exploit the Jabiluka deposit if they are to build their sales. Restricted markets, green lobby protests and potential native title disputation makes growth difficult.

Copper/gold: North has operations at North Parkes (NSW) and Alumbrera (South America). Unfortunately, the recent decline in copper and gold prices has affected the profitability of these operations. Alumbrera has had start up problems, particularly in stabilising metal recoveries. North Parkes appears to have cleared most hurdles including the extra crushing of the rocks due to the 'hardness' of the raw materials, although this has lowered throughput and lifted costs.

Pure gold is mined from Kanowna Belle, which greatly exceeded market and the company's expectations in the last quarter. But the prospects of growth are limited and North is attempting to resurrect the Lake Cowal Project (controversy #2).

The NSW Government banned mining from Lake Cowal after an accident in which cyanide escaped from a processing operation, causing serious loss of wildlife. It appears that with the passage of time, North is hoping that the wounds have healed, resulting in the lodgment of a new Environmental Impact Statement with the Government. But even if the government has a short memory, it's doubtful the residents and environmentalists feel similarly inclined.

Zinc: Operations at Zincgruvan (Europe) are performing better than expected with the outlook for the fourth quarter looking strong. Zinc should be one of the better performing commodities in 1998, helping this operation become one of North's shinning lights in the final result. It's a big turnaround from the problems of the last few years when the variable grades suggested the company could have purchased a lemon.

Forest Products: Redwood chipping is immensely profitable, but it's also cause for controversy #3. Hardwood product demand remains strong, particularly in Japan, but North is pursuing additional markets. Forestry remains a political football at the whim of the incumbent powers and you can be sure that wherever trees are cut down, environmentalists are sure to follow.

Warman Pumps: Warman is a world class product with good market share, supplying equipment to the resources industry, and controversy free. Of all the recent acquisitions that North has made, Warmans must be close to the best, if not the best.

Undemanding arithmetic

The arithmetic isn't particularly demanding, with price to earnings multiples looking quite good from 1999 onwards. The combination of an attractive dividend yield, around 4% fully franked, coupled with any rebound in commodity prices could see substantial upside to the earnings forecasts. A solid first half result of $74.9m was reported which should underpin our full year projections. If you're an investor with an appetite for metals and are prepared to ride out the controversy that the company's activities generate, at $3.87 North might just be the stock for you. ACCUMULATE. If you're an ethical investor look elsewhere.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

IMPORTANT: This information is general financial product advice only and you should consider the relevant product disclosure statement (PDS) or seek professional advice before making any investment decision. Product disclosure statements for financial products offered through InvestSMART can be downloaded from this website or obtained by contacting 1300 880 160. You should consider the product disclosure statement before making a decision about a product. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

* InvestSMART's capped Management Fee (capped at $451p.a.) does not include fees charged within any ETF held in this portfolio, estimated to be approximately 0.18% (indirect cost ratio). Brokerage costs are not included in this calculation. For more information about fees and costs, please see the Product Disclosure Statement and Investment Menu.

# InvestSMART Portfolio performance figures are after management and admin fees excl. brokerage and assuming dividends re-invested and no withdrawals. The peer comparison figures have been sourced from Morningstar data and is therefore limited to the funds and investment products included in their database. This may not include all funds available for retail investment in Australia. The peer calculation is inclusive of admin and management fees; excludes brokerage and no withdrawals have been made. InvestSMART cannot determine whether or not franking has been included, nor if dividends have been reinvested. Historical performance is not a reliable indicator of future performance.

^ Only funds and investment products included in the Morningstar Australia database are available for fee and performance comparison. This may not include all funds available for retail investment in Australia. Only funds with > three year returns were included in any fee comparison, and were compared to Morningstar's nominated benchmark. Fees are calculated by Morningstar as the average over 10 years. Whilst every care has been taken in producing these numbers, InvestSMART does not guarantee the accuracy of the figures produced in the table. Fee data may not include all costs being charged such as platform and adviser fees. For the effect of fees on your cumulative returns, please see our report How Fees Can Destroy Your Wealth.

^^ 557 Buy recommendations published by Intelligent Investor between 1 June 2001 and 30 June 2019 were independently verified by EY, as per the Recommendations Report; adjusted for franking, excludes admin and brokerage costs.